INTERNATIONAL FINANCES

KOZIUK Viktor ¹

¹West Ukrainian National University
OrcID ID : https://orcid.org/0000-0002-5715-2983

Internationalization of the yuan: the problem of unilateral benefits strategy and its global risks

It is stressed that expectations of nearest China’s leadership in reserve currencies area is basing only on quantitative analysis of its contribution to global economic power distribution. Renminbi internationalization is standing on the ground of global trade networking without direct recycletion on domestic assets market. Together with capital inflow restrictions this shows that China will to push the policy of hybrid reserve currency status gaining when global economy is softly forced to accept renminbi circulation without access to liquid assets market. This brings China unilateral benefits. Domestic market isolation from capital inflow is meaning its structural weakness and likely overheating. Due to this renminbi internalization naturally is not basing on capital flow liberalization. Bilateral swap lines widening between People Bank of Chine and central banks around the world is feature of the policy to accelerate dependence on Chinese import and liquidity in renminbi abroad. Expanding of parallel circulation of renminbi abroad and global capital access to domestic market restrictions demonstrate Chinese vulnerability to conflict between equilibrium upward assets prices movement and competitiveness. Global exchange reserves liquidity diminishes due to increase fraction of hybrid reserve currency — renminbi — produces risk of global monetary instability. Based on mentioned, there is an urgent need for introduction of supranational supervision over internationalization of currencies of countries like China.

Keywords: currency internationalization, yuan, global monetary stability, capital flow libera­li­zation, assets market, global exchange reserve.

JEL: F31, F33, F65.

KOZIUK V. . Internationalization of the yuan: the problem of unilateral benefits strategy and its global risks / V. . KOZIUK // Фінанси України. - 2015. - № 3. - C. 59-75.